After rallying against its rivals yesterday following the release of impressive UK employment data the Pound extended gains against the US Dollar during European trading.
The GBP/USD pairing was close to a two-and-a-half year high as economists bet that the UK’s recovering labour market will encourage the Bank of England to increase interest rates earlier than forecast.
The Pound continued to trade higher against its US counterpart even as the CBI reported sales measure fell from 34 to 14 in January, a much steeper decrease then the drop to 25 forecast by industry experts.
GBP/USD gains were later aided by the news that the US Markit PMI fell from 54.4 to 53.7 in January rather than advancing to 55.0 as forecast.
The Chicago Fed net activity index also fall short of estimates, although US initial jobless claims increased by less-than-anticipated.
Forex strategist Ian Stannard said this of the GBP/USD pairing’s movement: ‘The market at the moment is going to maintain a fairly Sterling-positive environment overall. If we start to see the Bank of England more formally pushing back against rate-hike expectations next month, then that would put Sterling back under pressure.’
However, the Pound wasn’t entirely bullish today. The British asset trimmed yesterday’s gain against the Euro and fell from a one year high as the common currency broadly strengthened in response to encouraging PMI reports for the Eurozone and its two largest economies.
Better-than-forecast manufacturing and services data for Germany, France and the currency bloc as a whole awakened hopes that the region’s recovery will become more stable as the year progresses, boosting the Euro in the process.
Meanwhile, a pleasantly surprising retail sales figure for Canada helped the CAD/GBP pairing claw back recent losses, although the ‘Loonie’ may shed these gains tomorrow depending on whether Canada’s inflation data adds to the case for the nation’s central bank cutting interest rates.
Tomorrow UK BBA Loans for House Purchase figures could encourage additional Pound movement before the weekend.
Pound Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6605 ,
Pound Sterling,,Euro,1.2155,
Pound Sterling,,Australian Dollar,1.8896,
Pound Sterling,,New Zealand Dollar,1.9998 ,
US Dollar,,Pound Sterling,0.6026 ,
Euro,,Pound Sterling,0.8228 ,
Australian Dollar,,Pound Sterling,0.5285 ,
New Zealand Dollar,,Pound Sterling,0.4998,
[/table]
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